On the earnings front, MCI WorldCom
wcom
posted a fourth-quarter profit of 42 cents a share, a penny ahead of the First Call estimate. Shares rose 2 3/8 to 50 1/2 in Instinet pre-market trading.

Meanwhile, Seagram
VO, -1.53%
posted a fiscal second-quarter profit from operations of $1.21 a share vs. the First Call estimate of $1.04 a share.

And Pharmacia & Upjohn
PNU, -0.19%
checked in with fourth-quarter earnings of 50 cents a share, matching the First Call estimate. Monsanto
MTC, -20.00%
which is merging with Pharmacia, registered a fourth-quarter profit from operations of 18 cents a share, in line with the First Call estimate.

Starwood Hotels
HOT, -0.18%
checked in with a fourth-quarter profit from operations of 51 cents a share, beating the First Call estimate by a penny.

In merger news, CMGI said it's purchasing UBid in a stock deal valued at about $407 million. Under the terms of the agreement, CMGI will issue 0.2628 CMGI shares for every share of UBid.com. The deal is expected to close in May. See full story. UBid shares
ubid
jumped 4 3/4, or 18 percent, to 31 7/16 over the Island ECN. CMGI
cmgi
rose 3/4 to 121 1/4.

In other shares seeing activity before the opening bell, Dell Computer
dell
rose 11/16 to 36 1/4 over the Island ECN, erasing earlier losses. The PC maker will post fourth-quarter results after the close Thursday, which are expected to show a profit of 15 cents a share, per First Call -- down from 21 cents just a few weeks back. In the bond market, prices were mixed, recovering in the long end following Wednesday's steep drop. However, market participants are likely to remain on the cautious side ahead of the third leg of Treasury's refunding -- the sale of $10 billion in 30-year bonds.

The economic docket saw the release of initial claims, which rose 27,000 to 301,000 in the latest week. See and .

In currency markets, the dollar slipped 0.2 percent against the yen to 108.58 while euro/dollar slipped 0.8 percent to 0.9863.

Wednesday's trading activity

The Dow Industrials took a beating Wednesday, extending its losses in afternoon dealings, as long-term bond yields surged and market participants turned cautious on the interest rate outlook.

Until the interest-rate situation is cleared, credit-sensitive issues like those contained in the Dow will continue to be ignored by buyers, according to Barry Hyman, chief market strategist at Ehrenkrantz King Nussbaum.

The Nasdaq, which began the session on a sharply positive note, also slipped, but losses were more contained compared to blue-chip issues as some players continued to use dips as an excuse to buy shares. Non credit-sensitive issues, like many Nasdaq stocks, aren't being affected by climbing interest rates, Hyman said.

The Dow Jones Industrial Average
DJIA, -1.24%
dropped 258.44 points, or 2.4 percent, to 10,699.16, with Microsoft, Merck, International Paper, Boeing and Caterpillar leading on the downside. It was the storied barometer's biggest setback since a 289-point tumble on Jan. 28. The Dow has shed 7 percent since the start of the year.

"The cyclical components of the Dow continue to drag it down," said Larry Wachtel, senior market analyst at Prudential Securities.

If the Fed is determined to slow the economy, Wachtel said, it will have the largest negative effect on cyclical issues. On the other hand, he added, the desirability of tech stocks can continue to flourish in the face of higher interest rates.

"It's healthy profit-taking after an unabated rise in the Nasdaq over the past week," noted Bill Schneider, head of block trading at Warburg Dillon Read.

Hyman said the market remains as narrow as ever, noting that seven out of 12 sectors in the Russell 2000 index are down for the year.

"Tech and biotech issues are the only sectors moving," Hyman added. Market players accept that the leadership remains within these two groups because if they don't, they aren't making money, he quipped. The Standard & Poor's 500 Index
SPX, -1.54%
fell 2.1 percent while the Russell 2000 Index
RUT, -1.78%
of small-capitalization stocks slipped 0.3 percent.

Volume checked in at 1.05 billion on the Big Board while 1.79 billion shares traded on the Nasdaq Stock Market. Losers bested winners by 20 to 10 on the NYSE and by 23 to 18 on the Nasdaq.

Internet issues slipped as market participants mulled accelerating reports of cyber vandal attacks against some prominent Web sites. Yahoo, Amazon.com and EBay were among the victims of the attacks. Shares of Yahoo
yhoo
ended off 10 7/8 to 362 1/4 while Amazon
AMZN, -1.80%
shed 2 7/8 to 80 1/4 and EBay
EBAY, -1.44%
lost 5 3/4 to 164.

In the meantime, buying in shares of Internet security firms stepped up considerably following the cyber attacks, with companies such as Internet Security Systems
issx
up 7 7/8 to 81 3/4, and Check Point Software
CHKP, -1.90%
up 7 15/16 to 148, enjoying smart gains. See related story.

Gold shares defied Wednesday's overall weakness as a major producer reaffirmed expectations of a longer-range turnaround in the price of the commodity, driving up prices. Barrick Gold
ABX, -0.35%
which saw shares rise 1 3/16 to 18 7/16, said adjustments to its gold-hedging program was based on its positive outlook for gold. See Futures Movers. The jumped 6.2 percent while April gold climbed $7.9 to $309.60 after falling $2.50 on Tuesday. (See 1-year chart of Philly Gold and Silver Index.)

In the bond market, the 30-year bond took a dive, extending earlier losses on comments from Treasury Secretary Larry Summers, who said the entirety of the yield curve would be used as a way of holding down borrowing costs.

"The implication, of course, is that the benefits of the supply reduction will be across the maturity spectrum and will not be disproportionately bestowed upon the 30-year bond," said Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co. Not surprisingly, the 30-year was the worst performer on the yield curve.

The market began to lose ground Wednesday after Treasury's $10.0 billion 10-year auction generated very disappointing demand. So far, both the 5- and 10-year offerings have seen poor sponsorship. On Thursday, $10 billion in 30-year bonds will be sold -- typically the hardest issue to absorb -- which may put additional pressure on the market.

The economic docket was on the dry side Wednesday. Only December wholesale inventories, up 0.4 percent, were released. On Thursday, weekly initial claims will be out. See and .

Turning to specific issues, shares of Dow-component Boeing dropped 2 1/4 to 38 3/4. The company's
BA, -0.84%
engineers and technicians walked off the job Wednesday after last-ditch talks with a federal mediator failed to produce an agreement on a labor contract. See full story.

Goodyear Tire & Rubber Co.
GT, -1.25%
registered a fourth-quarter profit of 30 cents a share, beating the First Call estimate by 2 cents. The company also said its operating performance should improve in the first quarter and beyond. Shares rose 11/16 to 22 3/4. See story.

Shares of Cisco climbed 3 to 128 13/16. After the close Tuesday, the company
CSCO, -4.02%
posted a profit of 25 cents a share in its second quarter, a penny ahead of a revised First Call estimate. The networking giant's pro forma net income was 17 cents a share in the year-ago period. In addition, a 2-for-1 stock split was set. See full story.

PaineWebber increased its fiscal 2000 earnings-per-share estimate on Cisco to $1.01 from $0.98 and their 2001 estimates to $1.28 from $1.24. The brokerage also raised its price target to $200 from $138. Meanwhile, Gruntal & Co. raised its near-term price target to $160 from $130 and its long-term target to $210 from $160. In other activity, BroadVision
BVSN, -0.12%
shares jumped 17 13/16, or 11.7 percent, to 170 1/16 following its announcement of a 3-for-1 stock split.

Other business-to-business, or B2B, companies saw gains Wednesday. Shares of Clarus Corp.
clrs
jumped 11 3/8, or 20.1 percent, to 67 15/16. Coverage on the company was initiated by Salomon Smith Barney with a "buy" rating and a $100 to $125 1-year price target.

Salomon initiated coverage on others B2Bs: Ariba
arba
was started with a "buy" rating and a $250 1-year price target and Commerce One
cmrc
with an "outperform" and a $215 price target. Ariba shares rose 1/2 to 188 3/4 while Commerce One fell 9 3/4 to 155 3/8, erasing earlier gains.

Over in the IPO arena, shares of Vicinity
vcnt
shot up 31 3/4, or 186.8 percent, to 48 3/4 on their Wall Street debut. The provider of Internet-based marketing infrastructure services went public at $17 a share, much pricier than its $11 to $13 range.

Shares of Chiron Corp. dropped 6 7/8, or 13.0 percent, to 46 1/8 after checking in with a fourth-quarter profit from operations of 13 cents a share late Tuesday, missing the First Call estimate by a penny. The biotech company's
chir
stock had risen steadily in advance of the release of its quarterly results. See full story.

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